Huawei hosted 700 analysts and media participants in Shenzhen China last week to attend its annual analyst summit, nick-named HAS2019.  The company's high-level message was simple - the company is an innovator and is moving down the stack into semiconductors and is partnering with and funding university projects to develop basic research.  This year’s message was different from than the prior-year meeting, but several transformative events have occurred between this meeting and the prior year's, most notably the 2Q18 shipment ban on ZTE, the US / China trade dispute and US efforts to thwart Huawei’s participation in the 5G infrastructure of its allies.  Interestingly, during HAS2019, the Apple and Qualcomm announced their chip-supply and patent settlement, Samsung announced its foldable phone (which has been met with criticism), and Ericsson & Swisscom announced that the operator went live with its 5G network.  All three of non-Huawei events highlighted the importance of Huawei’s chips and innovation announcements.

The company made announcements in its main keynote presentations on day one about seven different chip projects delivered recently or planned shortly.  Chip-level is unusual for what are typically high-level presentations from a keynote-level presentation.  These chips (seen in accompanying pictures) are:

• Ascend 310/910.  Artificial Intelligence (AI) chip for cloud (leads to its Data Center Ethernet Switch iLossLess cloud service)
• OptiXtreme H6 oDSP.  Optical transmission Digital Signal Processor (DSP).
• Hi 1822.  FC/IP chip used for products including Solid State Drives (SSDs)
• Atlas 200 AI acceleration for AI computing intended for September 2019 announcements at Huawei Connect
• Tiangang 5G Basestation chipset
• Balong chip series intended for 5G smartphones and other Customer Premises Equipment (CPE)
• Kungpeng ARM chips for computing

The company shared more details about other chips in breakout sessions on the second and third days of the conference, as well.  The point we are making, though, is that upper-level management provided significant detail about semiconductor developments at Huawei.

The company shared more details about other chips in breakout sessions on the second and third days of the conference, as well.  The point we are making, though, is that upper-level management provided significant detail about semiconductor developments at Huawei.  Another relevant semiconductor-related point to make is that the company is de-emphasizing its reliance on Intel-based architecture and instead is focusing on devices such as ARM-based processors, as well as GPU, FPGA and NPU semiconductors.
We would be remiss if we did not mention some of the system-level announcements and observations related to 5G that were made at the HAS2019 conference, which include:

• MU-MIMO.  Of Huawei’s 70,000 shipments of 5G base stations as of the show, 97% were MU-MIMO based.  The company expects MU-MIMO to be deployed not only in urban areas but also in rural areas.
• SingleRAN Pro.  The company is taking an architectural approach that is different from what some service providers in the world want; it is delivering an integrated product approach where multiple frequencies and base stations are integrated into the same enclosures.  This converged approach is different from the architectural approach being promoted by some smaller vendors like Altiostar, Mavenir and Parallel Wireless, which uses the O-RAN standard and features a disaggregation between various components like antenna and base band processing.  Huawei’s rationale is that it is less expensive on capital spending and operational spending to use the integrated approach.
• Converged Mobile Packet Core.  The company plans to have 1H19 commercial availability of its 2G/3G/4G/5G NSA/5G SA packet core system.  In slides depicting this product, it prominently features chip systems such as GPU, FPGA, NPU, and ARM but specifically excludes x86 references. 
• Huawei expects to deliver its first 5G phone in November 2019

​

even more follow on

Mid-band spectrum shortages in the US was the main thrust of the 5G Americas sponsors. The idea is that the rest of the world has lots of mid-band spectrum available and service providers in countries that could be considered economic leaders (Japan, Korea, China, Western European countries) have plenty of available mid-band spectrum that is ideal for 5G, while the US does not.  This group at 5G Americas, which includes service providers, vendors and standards bodies, is saying that US leadership in cellular infrastructure and the entire app economy that relies upon it may be at risk as 5G get deployed.

Other topics discussed:  AT&T is currently out for bid on its 5GC infrastructure, and this caused some interesting posturing by the vendor attendees (like Ericsson, Nokia, Cisco, Mavenir) at this conference, with each trying to identifying their strengths.  It seems the consensus is that all mobile operators in the US market are using Option 3X, an EPC anchoring system.  And, the consensus seems to be that US operators will need to move to 5GC once most traffic is coming over 5G Radio (“New Radio”).  Vendor selection appears an open field, once again, as 5GC has 13 different microservices, each which could theoretically be parsed out to different vendors.  Operators are saying, though, that while this multi-vendor selection may lead to savings on purchasing, it will increase integration spending, so these two have to be balanced out. 

Mobile Edge Computing:  The consensus is that a 50 mile radius (or others are saying 100 km) is considered the ‘edge,’ or the ‘low latency’ zone.  We expect, however, that the data forwarding plane (‘user plane’) will be distributed to, say, 100 locations within a territory like the US market, while the control plane will be much more centralized (perhaps as centralized as it is currently, where it might be considered to be like 1/4th the number of locations). 
​
CBRS.  The consensus is that testing will be done by mid November 2018 and Initial Commercial Deployment by 1Q19, potentially spilling into 2Q19.  PAL auctions are expected by attendees to be a 2019 event, with 2020 traffic running on PAL spectrum. Commscope represented the views from a SAS standpoint for this discussion.There were discussions about the C-Band (6 Ghz) potentially using the same type of Automatic Frequency Coordination system, but the consensus is that it is too early to declare that the path forward.

We attended Mobile World Congress Americas (MWCa) in Los Angeles, CA this week, as well as the AT&T Spark event in San Francisco.  Since 5G is launching first the US, these two events became the public events where significant 5G-related announcements happened.

• Verizon.  Will launch 5G Fixed Wireless Access (FWA) on October 1 in four markets: Houston, Indianapolis, Los Angeles and Sacramento.
• AT&T.  The company reiterated its own 5G plans (mobile 5G by year-end 2018 in cities such as Atlanta, Charlotte, Dallas, Indianapolis, Oklahoma City, Raleigh, Waco, Houston, Jacksonville, Lousville, New Orleans and San Antonia), plus it made some announcements like that it is beginning 5G-ready CBRS equipment testing (using Samsung CBRS equipment and CommScope as SAS provider).  Also, at the Spark event on Monday, the company announced three strategic telecom equipment suppliers, Ericsson, Nokia and Samsung. 
• T-Mobile.  Announced that it had completed a Cisco vEPC system (upgradeable to 5G Core) carrying traffic for 70M users that was from Cisco.  It also announced that it signed a $3.5B 5G agreement with Ericsson.  This is in addition to the July 30 announcement made earlier with Nokia for $3.5B, as well.  Generally, the company has set expectations as recently as September 10 that it will provide nationwide 5G by the year 2020.
• Sprint.  Announced that it had demonstrated a 5G NR connection of Massive MIMO with Nokia equipment.

Additionally, discussions about spectrum in the US market were very active discussions.  Some points we picked up on:

• No new mid-band auctions will occur in the US market for another 2-3 years, so this means that new capacity is going to come from LAA (just announced on the iPhone Xs this week, as well) and from CBRS (discussed above).
• The "who has the fastest 5G throughput" battle will be won at the millimeter wave.  In other words, using millimeter was, speeds as high as 10 Gbps are possible, but with mid-band (1-6 Ghz), where LTE is currently deployed, cannot go much over 2 Gbps.  So, to beat the Ookla Speed Test, the mobile operators who deploy mmWave early will get a leg up.  However, in order to deploy mmWave, these have to be small-cells that are within 100 meters of users.  Since it is so difficult to get real-estate rights and backhaul for small cells, this is going to be a big challenge.  Nevertheless, this is how the battle will be won.
• T-Mobile's 600 Mhz rollout is now in 1,250 cities.  The company will eventually enable 600 Mhz 5G.  600 Mhz should dramatically improve T-Mobile coverage because it is low-band spectrum.

Yesterday, Ericsson and Juniper announced plans to partner to tackle 5G transport challenges together.  Additionally, Ericsson announced a partnership with optical transport company, ECI.  The companies said that Ericsson's Router 6000 product family will focus on fronthaul and backhaul and edge compute and will be complemented by Juniper MX, PTX and SRX Series portfolios providing edge, core and security capabilities.  Additionally, in today's presentation to analysts, Ericsson showed that the overall transport capability from Ericsson will also include Optical Transport from both ECI Telecom and Ciena.  The Ericsson Network Manager will be capable of managing not only Ericsson products, but also the three families of products from Juniper.

ECI will be used for Metro, and will be completely integrated with the Ericsson OSS platform.  The company conceded that it is de-emphasizing its in-house metro optical product line and focusing on ECI.  Ciena will be used for long-haul transport predominantly, mainly the Ciena 6500 product.  Ericsson concedes that both ECI and Ciena products can move to other domains.

To enable automation for 5G, Ericsson can only guarantee that networks working with Ericsson and its partners can successfully be automated.  This automation / partnership topic illustrates just how complex it will be to make 5G networks work properly.

Recall that Ericsson and Juniper had a close partnership that goes back many years.  In fact, the Juniper router predecessor to the MX was used as the underlying hardware for Ericsson's very important GGSN/SGSN and later EPC capabilities. Ericsson eventually replaced the Juniper product for EPC with its own Router 6000.  Subsequently, Ericsson announced a partnership with Cisco, which was more general in nature.  That relationship did not result in much tangible progress, from what we have learned; and the relationship was done under previous management teams for both Cisco and Ericsson.  Ericsson explained today in its analyst briefing that Cisco and Ericsson compete in several areas.  So, this new Juniper relationship is important in that it re-kindles an old relationship and plays to both companies' strengths.

Nokia was bullish on its technology developments and cautious on telco capex.  CEO Rajeev Suri described the telecom market as having tough market conditions and expects telco equipment market revenues down in 2018.  He said the Swedish competitor pricing aggressively and that it will be difficult to keep share in China with 5G ramp.  He said Nokia is executing on plan to grow non telco verticals – and it will take 3+ years before it is sizable enough to potentially offset telco challenges.  He emphasized a key strength is its focus on cost reductions.  He highlighted success in cable MSO market and that its FP4-based router will ship in a few days.  Suri thinks 5G could roll out in China first, maybe tied with US.  Nokia CEO's comments were quite similar about 5G rollout timing expectations compared to comments made at Huawei’s recent conference (2019 initial deployments; chipsets 2019; broadening deployments in 2020).

Some more details from Rajeev Suri's presentation:
Ericsson.  We were surprised that the CEO of Nokia took the opportunity to take some digs at Ericsson.  He said that Ericsson is pricing aggressively; it also shared some quantitative statistics about competitive take-outs of Ericsson installed base. He argued that it has broadest portfolio in industry (fixed, software are examples).  

China.  Two interesting comments about China – a) will be difficult to maintain share in China as 5G rolls out, b) China might be first to deploy 5G.  
Emphasized that Amazon Web Services is making a presentation at this conference.  Said its new FP4-based routers are more efficient than any competitor and will be so for at least the next year.

Other presenters made comments about 5G mainly.  Here are some interesting comments:
Artificial Intelligence.  The company has a lot of network automation technology that is it working on but would not share details about this technology.  We guess Nokia is more open with its customers and that it'll make announcements at MWC '18 in Barcelona.
5G Radio.  Beamforming is a key technology that will be highlighted in 5G.  Also, the company's separation of Stage 1 and Stage 2 MIMO processing makes the bandwidth needs from baseband to array be much less than competitors.  Additionally, the company explains that its expected systems will have dramatically higher efficiency than competitors - again, the company kept its secrets here under wraps.  Late 2018 will see first 5G deployments, going into 2019.
IP/Optical.  Basil Alwan, President IP/Optical division said the first FP4-based product went to production end of the last week.  Major customers will take shipment before the end of this quarter.  The company will ship its 57 Terabit router during 1Q18.  SD-WAN will replace MPLS VPNs over time, perhaps at a rapid pace.  

Service Provider presentations:
Amazon Web Services IoT.  Satyam Yadav, GM of AWS IoT made a presentation at this meeting.  The presentation focused on how Amazon's IoT software and its services would be used in a partnership with Nokia to deliver Amazon IoT services.  
Sprint.  Ron Marquardt, CTO.  He is not sure how much customers might pay for lower-latency connections available from 5G.  Now that the uncertainty of the T-Mobile US acquisition is beyond us, Sprint says it is rapidly focusing on spending to upgrade its network.  Sprint also said it plans to deal with fewer vendors in the future.
Elisa. The Finnish operator presented data about its extraordinary data traffic growth and its per-subscriber data usage being far above competitors as well as other service providers in the world. 
​

Ericsson and Cisco representatives provided an upbeat presentation about the corporate partnership, offered some customer success metrics and discussed some new initiatives. The teams held back from providing concrete measures of progress such as revenues. Our judgement is that since each is continuing to make joint offerings, the relationship is moving ahead.

Customer engagement progress was characterized at 100+ deals and 300+ engagements.  
It is interesting to figure out what each of the two parties deliver to customers.  The way the two companies characterize what each is good at and what each delivers to customers is quite similar to the way it was characterized at the previous year's MWC 2016 presentation - with one possible exception: Each of the spokespersons said that customers are using the Ericsson wireless packet core (Cisco also sells wireless packet core).

Roles and Responsibilities.  Generally, the teams still see the roles and responsibilities split up as follows:

• Cisco does "IP," generally and specifically cited routing and WiFi
• Ericsson does Radio Access and provides professional services, OSS/BSS and typically serves as the Systems Integrator
• Cisco sees this partnership as a means to target emerging markets.  This is because Ericsson has significant market presence in emerging markets.
• Working on smaller deals up front, then if the relationship works, will pursue bigger sized deals.

Given how strategic the NFV landscape is for the future of the telecom industry, we were interested in each company's participation in NFV Orchestration.  The partners say the way they split up the orchestration between each other would typically be as follows:  Cisco's NSO is used typically in managing the network and resources (Cisco claims it wins big here).  Ericsson's transport-oriented NFV is typically used. And then Ericsson's orchestration system manages both Cisco's and Ericsson's lower level management systems.

Some wins discussed:

• 3 Italy
• C&W
• Aster Dominican Republic
• Vodafone PT
• Evolved WiFi networks in Africa
• Next Generation Network - Middle East
• W transformation.  Vodafone Hutchinson AU
• IP Transformation - Telefonica Latam

As we explained earlier, the partners discussed new three initiatives discussed for the future:

• Collaboration Mobile Convergence mobile phone used as enterprise device). UC, presence, messaging from Cisco using its Spark offering and Telco TAS delivering VoLTE from ERIC.  CMC is intended to allow mobile phones to be useful communications devices for enterprise users.  In this case, users will make VoLTE calls using the regular dialer of the phone and can use collaboration capabilities using the Cisco Spark application.  Avail late 2017.  There is a press release with more detail.
• WiFi/Small Cell joint offering.  Uses Ericsson small cell and Cisco WiFi.  Together, these systems allow traffic steering.  
• Managed security from Cisco.  Orchestrated by Ericsson.

At the Ericsson Media and Analyst Briefing today, Ericsson's new CEO Borje Ekholm made his first MWC presentation, and then ceded the stage to well-known T-Mobile USA (TMUS) Chief Technology Officer, Neville Ray.  We learned several things that were interesting: T-Mobile's plans for 5G rollout and 2G/3G shutdown, and Ericsson's high-level view on its strengths as 5G rolls out.

Neville Ray's comments conveyed a pragmatic and agile service provider's views:

• 2/3rds of all voice minutes are now on Voice over LTE (VoLTE).  Ray challenged anyone in the audience to find another telecom service provider with a greater percentage of minutes on VoLTE.
• 93% of all wireless data is transmitted on LTE
• Plans to shut down 2G and/or 3G when 5G rolls out, elaborating that the company has decomissioned the 'lion's share' of 2G spectrum utilization.  However, Ray says it has found significant customer interest in its 2G (GSM) network for connecting to Internet of Things (IoT) devices fitted with GSM modules.  In fact, there is a debate at TMUS as to whether to shut down the 3G network before the 2G network.  TMUS claims it has taken share from AT&T because its competitor shut down its 2G network and IoT customers in the US market have signed up with TMUS.
• The company echoed views it has shared with the media in recent months - that it isn't so committed to virtualizing its network at this point.  The CTO explained that it has a sufficiently modern network core that it isn't necessary to upgrade to a Network Functions Virtualization (NFV) infrastructure - at least until it rolls out 5G - and he put the conversion-to-NFV timeframe at 3 to 4 years.
• TMUS is not thrilled with the prospects for 5G fixed wireless, the kind that replaces wired broadband.  He said that if this is all 5G does for the industry, we may as well all go home.
• The company has deployed only 1,000 small cells to date.  It plans as many as 5,000 to 6,000 by the end of 2017.  Part of this rollout is using unlicensed spectrum, and it will roll out LTE-U and LAA.

Ericsson CEO Borje Ekholm positioned Ericsson's view on 5G:

• 5G will be based on the cloud, and potentially we could see entire 5G networks running entirely on the cloud
• Ericsson is well positioned in 5G due to its exposure to virtualization, security and its strong position in OSS/BSS.